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My sixteen year old son has a job that pays about $80/week and a savings account with about $1,500 and a Roth IRA with a few hundred dollars. How would you teach him effective money management skills – credit/debt traps, budgeting, retirement, investing, etc.

Take him to the bank and have the banker explain how a checking account works. Depending on how trustworthy and dependable he is, he could get a debit card. Otherwise, start him with an ATM card and be sure he keeps track, then progress to the debit card. I would also suggest a monthy investment in the roth IRA. I am a banker and cannot tell you how often a kid goes off to college, then gets his first checking account and ends up hundreds of dollars in the hole. Guess who ends up paying for it. By the time they’re out of college, there’s credit card debt, student loans and still no financial savvy. A little experience now will go a long way when he’s on his own!

I’ve been reading all these articles about people trying to get out of debt because they can never pay off their credit card balance, people living paycheck to paycheck, or those that doesn’t have enough savings for their retirement.

Just wondering how many of you out there are really this much in trouble? If you don’t gamble and use your money wisely, poeple should be able to save. I’m lucky to say I don’t know anyone this much in trouble yet. So, is media just exaggerating?

well i am a loan officer so i deal with the finances of many people who are in trouble and need help. And i can attest through personal experience tha it is absolutely true. 95% of the clients i deal with are in a considerable amount of debt! and they are trying to fix it by refinancing but often times cannot because of the way the market is. and just so you know everything that the media is talking about when it comes to losing homes is true as well. i sadly am not able to help and deal with way too many people who are losing there homes. the main reasons why this is happening is people are not being smart about there money. they are not spending it wisely. they either get more than they can afford not allowing themselves enough money to go beyond getting by so as soon as bad times hit they are in the whole. and some people are just irresponsible. i worked with one person who made 7 thousand a month and only had four thousand in bills but still would be missing payments. and i actually was going to be able to signigicantly decrease his debt and get him on the right track. all he had to do is send me one sheet of paper and the deal was done. yet he didnt i kept calling for two weeks and he would not answer. Three months! later he calls me and tells me hes ready to do it and he really needs the money i was going to give him because his daughter is going to school. so i said ok i was ready three months ago but no problem lets do it now. i reran his credit and it turned out that he was 3 months late on a payment and was going to lose his house! i remember the very last conversation we had before those three months i told him dont forget to make your payment otherwise this loan is dead. and his words were "c’mon man im not stupid ive learned from this mistake before i alredy made my payment". yet that was the payment that put him in foreclosure. Why simply because he procrastinated on things that should have been a priority. sadly this is only one of so many stories i have. people are just irresponsible. i mean seriously you should never take on a large debt if you cannot easily be able to properly afford it. i hate seeing people lose their homes!

I am considering employing the services of a Financial Advisor. What exactly do they do? Are they helping you budget? Improve your credit? Invest your dollars? What can I expect, as I need to make sure I get my money’s worth!

Thanks!

The essence of Personal Financial Advising

So the answer you are looking for as you read this is "What specifically is http://personal-financial-advising.blogspot.com/. This term means different things to different individuals and I’m here to inform you about what Personal Financial Advising is and how it can help you on your way to personal financial freedom.

The NAPFA defines Personal Financial Advising as situation where industry professionals help people to manage their money for both the the near future and long term by helping them in deciding which stocks, bonds, and mutual funds to invest in. This is an excellent definition of Personal Financial Advising in general terms but does explain everything.

Personal Financial Advising is needed when someone needs assistance in managing their money but does not have the time, knowledge, or resources to do it in the most effective way. When this happens a Personal Financial Advisor is needed.

The goal of a Personal Financial Advisor is to help their customers in attaining all of their financial goals. A Personal Financial Advisor should be involved in all areas of a customers financial situation beyond their day-to-day situations. In doing this one might be involved in helping customers invest for retirement, invest for a childs college, make the proper general investment choices, or even help with home loans (mortgages) or car loan advice.

When people uses a Personal Financial Advisor there is often a charge associated with the use of services. Often times though the charge is greatly outweighed by the financial gains one sees from the advice they receive.

In the end Personal Financial Advisors is just as they seem. They are simply advisors who give clients advice on how they should handle their finance so that their money works for them instead of them working forever because they don’t have any money. When it comes down to it, it is ultimately the individuals decision on how they want their money to be handled. Personal Financial Advising is a great tool for anyone who wants to experience financial freedom but does not have the knowledge, time, or resources to do it on their own.

I hope this article has at least give you an idea of what Personal Financial Advising is. This article was very brief on the topic of Personal Financial Advising and a book could most certainly be written to explain it in full detail.

If you have any questions about what Personal Financial Advising please feel free to visit my newly started blog regarding it. I plan to post information about it, including advice, every couple days.
http://personal-financial-advising.blogspot.com/

I’ve just started working after college, and i’m looking for some advice on mutual funds – any books, ideas or personal experience would be great —
thank you!

Alright, let me first say that the answer that recommended moneycentral is a good one…the answer that said mutual funds are a bad investment is wayyyyy off… and the long answer with several sites may make you think it’s all way too complicated.
First, understand what the funds are… they are a collection of stocks that you buy shares in if you buy into the fund. Simple enough…where it gets complicated is: a collection of WHAT stocks? That’s why there are so many different funds…all are different avenues/ approachs to the same goal: invest to make money.
A weekend of reading at a few places should familiarize you with what’s available… and maybe what suits your age and goals. moneycentral, yahoo/finance, beginnersinvest.about.com
Those places give you the basics…then comes your choices: are you going to start with an IRA account or just a regular brokerage account…. then comes picking the funds you will initially invest in: do you just want to " start investing" or are you going to actively try to get better and better returns? Either approach is good for your future…just a question of " different strokes".
You can learn to compare funds using yahoo/finance…or MSN/money ( may have come with your computer) or money central msn/cnbc.
If you are going to be passive just buy into a " balanced " or " blended" or even a " life–cycle" fund ( the name of the fund usually includes your approximate retirement date…all companies have ’em just give them different names)
One suggestion: even if you are going to be passive, make that first fund something that includes " international" or " global" ( just a fact of life – that’s where the money is being made right now and for a few years to come)
If you are going to be more involved…get into a couple of funds… in sectors that look to have potential…like " energy"..
or " emerging markets" .. " telecom"
Also, read up on ETF’s…if your first investment is going to be under say $ 3000. , you probably can only get into one ( maybe two) mutual funds…but with ETF’s you can take " smaller bites" and spread your money into 3 or 4 sectors.
Last…you mentioned " just started working"…does your employer offer a 401k ? That can be your first introduction to " investing" if they do. If they do…be sure to get in…and contribute a percentage of your pay ( it should AT LEAST be an amount equal to what your employer will " match")
If you are " on your own"…don’t be overwhelmed by all these terms, choices, and opinions…it’s NOT anywhere near as complicated as it sounds…after you take the first steps it becomes soooo simple…just keep your eye on things.
Okay, one more " hint": there are some pretty decent people here on answers…if you read some answers and click on some of the " top contributors" and view a lot of their past answers…you may find a lot of info you can use…just something to do if it rains or you’re snowbound.
Good luck.

I’m wondering if people had a better base of information on money management, if so many people would be having the problems that they are having in our current economic crisis. Looking for the roots of the issue, I’m curious if people learn what they know about money from family, friends, personal experience, and how many people actually took business classes or accounting in school or as a portion of their degree. I’m very curious to see if people have had any formal education on money management of any sort.

To make a long story short, I was 55 years old
when my manager asked me why are you not
enrolled in the 401k plan? I said whats that?
He gave me a booklet about the plan and the
need to save and invest my money for the
retirement years. It was like a light went off in
my head. I began saving and investing as much
as I could. Now in my retirement years, I’m glad
I took his advice because now I am debt free and
enjoying a decent retirement.

I’m in a high school personal finance class. The book says 10%, but that seems like too little. How much would you set aside for retirement?

10% is probably sufficient if you start before you are 25 years old and make a relatively modest salary. The later you start, the higher percentage you need. And the higher your salary, the higher percentage you need, because Social Security will not make up as big of a fraction of what you need once you retire. Of course, this is sort of a minimal retirement — if you want to retire earlier or more expensively (like if you plan to travel or take up an expensive hobby) then you would need to save more.

Personally, I encourage anyone your age, as soon as you get that first job, to save like crazy. Here’s why. First, every $1 you save when you are 25 years old should grow to something like $16 by the time you are 65. But every $1 you save when you are 35 grows to just around $8 by the time you are 65. And by the time you’re 45, each dollar grows to just around $4 when you are 65. The dollars you save when you are young have lots of time to grow nicely and really work for you.

Second, it is much easier to start out young with very frugal habits, save a lot of money, and then relax as you get older. It is much harder to go the other way!

And third, you never know what will happen. If you should lose your job, have a major emergency expense, or something else, you may not be able to contribute to your retirement for a while. So it is nice to be a little ahead there, in case you need a cushion.

So, save like crazy when you are young!

I’ve worked really hard on straightening out my finances over the last two years. I just wanted to see how my approach compares to others. The personal finance sites make it seem like everyone is maxing everything out:

My wife and I contribute about 28,000 into our 401K’s each year and we max out our IRA’s (8,000) each year.

We might have trouble on the IRA in 2007 because of income limits. It that happens, I’m planning on just opening a mutual fund account on the side.

So far, we have @ 45K. We’re both 27.

Besides that, we have a mortgage and car payments. Everything else is paid and I plan on starting a separate mutual fund for the kids college (I don’t like all the rules associated with the college savings plans).

The only reason that I say that I am better off than you is because I’M ALREADY RETIRED. Just kidding, you are doing it extremely right. Now that I say that, let me give you some thoughts:
1) Buy, read and study the books by James P O’Shaughnessy, What Works on Wall Street, John J Bowen, Creating Equity and Benjamin Grapham, The Intelligent Investor.
2) Buy, read and study Jane Byrant Quinn’s book Making the Most of Your Money. It is a little dated but the information in it is like great foundational information to start your understanding on personal finance.
3) Find a "Financial Peace University" class in your community. You are following this program to a great extent, but this will confirm and add to your knowledge. www.daveramsey.com to find a location.

Then follow what you learn and at age 45 you can come join me in retirement. Oh by the way, retirement is really being more like a tire, it is being retreaded because now you can do exactly what you were born to do. Whether that be volunteer work, owning and managing assets, travel, enjoying life, enjoying family, going on a mission trip, or all of the above.

Government backed treasury bonds. Roth IRAs. Tax sheltered interest. I’ve heard all these terms but I haven’t a clue to what they mean. Aside from going and getting a degree in finance, can someone recommend me a book or several books that explain finances A-Z? I don’t want to become a stock broker, but I do want to be good enough that I can take my income, and know exactly how to invest it, where to invest it, how much, what the risks are, etc.

So here are five practical steps to start learning finance and business:

-Read an introductory book on personal finance
In my opinion, starting with personal finance is a good way to learn finance and business. It is from personal finance that you get the most applicable ideas for your life. Isn’t it ironic if you know a lot about finance and business but have your own personal finance in a mess?
So I’d recommend reading a book that introduces you to all important aspects of personal finance. For this purpose, I like the book Personal Finance by Kapoor, Dlabay and Hughes. It is very readable, and cover all important aspects of personal finance like budgeting, consumer credit, housing, insurance, investing, and retirement. The book is also very scannable; you can easily scan through it to grasp the main ideas of every part.
The book is expensive ($132.19), but I borrow it from the library for free. If you can’t get it, don’t worry, you can always read other books. The bottom line is the book should introduce you to all important aspects of personal finance.
-Subscribe to a personal finance blog
Subscribing to a personal finance blog will help you apply the principles of personal finance in your daily life. It will remind you of the principles you have learned, help you learn new principles, and most importantly help you put those principles into practice. The blog I like is Get Rich Slowly. The tips and experiences shared there are very useful and practical.
-Subscribe to a personal finance podcast
Similar to my previous point about blog, subscribing to a personal finance podcast is a good way to help you put personal finance principles into practice. The podcast I like is Money Girl. It’s short (often less than five minutes), very easy to understand and contains a lot of practical tips.
-Subscribe to a business podcast
Now we move from personal finance to finance and business in general. A good way to start is subscribing to a business podcast. There are many business podcasts, but the one I like most is HBR Ideacast for one simple reason: it gives me preview of the newest business ideas.
The podcast often features interview with the authors of new business books. By listening to this podcast alone, I can quickly get the main ideas of those books. In some cases, I get enough from the podcast that I no longer need to read those books. It saves me a lot of time while keeping me up-to-date with the newest concepts in the business world.
-Read an introductory book on finance and business
Eventually, to get deeper knowledge about finance and business, there is no choice but to read “real” finance and business books. By “real” here I mean something that uses those jargons MBAs talk about in their conversations about business.
Fortunately, there are books that can help you get there in relatively short time. The book I like is The Ten-Day MBA by Steven Silbiger. This book introduces you to all important aspects of finance and business like marketing, accounting, economics, and strategy. It gives you enough knowledge to understand the conversations in finance and business world.

These five steps should give you strong enough foundation in finance and business. However, if you want to move beyond these five steps, I’d recommend reading the books listed in the Personal MBA. The list contains 42 books and periodicals which aim to give you finance and business knowledge comparable to someone taking an MBA program.

I’m still in college and know very little about personal finance. My parents manage to get by but I really question some of their decisions at times because I’m further in debt with loans than my friends in the same situation. I wanna manage my own finances with saving, investing, debt management, stocks. etc. What are some recommendations for good programs or books for this? Thanks.

Without a doubt the best for me is TOTAL MONEY MAKE OVER, by Dave Ramsey. Learn how to live your life to become debt free, and especially start young, and be really free of credit interest in order to be financially stable early. You also become quite healthy for your retirement.

Check out his web site http://www.daveramsey.com.

My mother is retiring next year.

What can she do now, within the UK personal finance spectrum (savings schemes, tax credits, pension scheme tricks and tips, discount schemes for pensioners) that will mean she can enjoy a nice lump sum on retirement?

She worked for the NHS for a time, but now works in a private health care and I’m pretty sure she has a private pension scheme too. Does that change things?

All answers ABOVE BOARD please! :o]

start saving early in life!!!!